County's contribution to pensions growing

STOCKTON - Whether the state had passed pension reform legislation over the summer, the cost of providing retirement benefits to public employees was going to increase next year in San Joaquin County.

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By The Record

recordnet.com

By The Record

Posted Dec. 9, 2012 at 12:01 AM

By The Record
Posted Dec. 9, 2012 at 12:01 AM

» Social News

STOCKTON - Whether the state had passed pension reform legislation over the summer, the cost of providing retirement benefits to public employees was going to increase next year in San Joaquin County.

County government's annual contribution to the county retirement fund is expected to grow from $108.2 million to $119.8 million in 2013, an increase of about $11.6 million, according to the county.

On average, it's more than 30 percent of the county payroll.

The global financial crisis of 2008 wreaked havoc with investments in the county retirement fund, and it is expected to cost the county for years to come.

The San Joaquin County Employees' Retirement Association handles pensions for county government and some other agencies in the county. It also manages the roughly $2 billion retirement fund.

When the fund shrinks, government agencies pay higher annual contribution rates to make up for the loss. The 2008 hit was so bad, the Retirement Board spread part of the loss out over decades. The extended "smoothing" of the extraordinary loss kept the amount of money the county paid into the retirement fund to keep it healthy from skyrocketing during an era of budget cuts.

Even so, the cost of providing retirement rose steeply and is expected to rise again, according to county and Retirement Association officials.

Rates employers pay vary by type of employee and contract agreements. It works out that the county is paying a rate of up to 55.6 percent for public safety employees and up to 30.7 percent for general employees. On average, public safety employees pay an average rate of 4.4 percent and general members pay a rate of 3.25 percent.

A second tier for employees hired on or after Jan. 1 is new this year, created by statewide pension reform law. The county pays lower rates: 41.3 percent for public safety workers and 23.5 percent for other employees. The employee rates are higher, too, with public safety workers paying 13.75 percent and other workers paying 8.25 percent.

At the end of 2011, the retirement fund had grown by 1 percent, to a market value of about $1.9 million, according to the retirement association. It had an unfunded liability of $918 million.

But the fund is on track to have a much better 2012. Through September, the fund saw growth of more than 9 percent, said Annette St. Urbain, Retirement Association CEO.